This article explains how to change your VAT Flat Rate Scheme details in the middle of a VAT quarter if you file traditional VAT returns
Before you get started
Instead of following the steps outlined below, please contact FreeAgent's support team if you ever need to change your VAT Flat Rate Scheme details in the middle of a VAT quarter and either of the following conditions apply:
- you file Making Tax Digital (MTD) VAT returns
- you run a hospitality or tourism business and you want to make the change between the dates of 15th July 2020 and 31st March 2021
How to change your VAT Flat Rate Scheme details mid-quarter
You may need to make changes to your VAT Flat Rate Scheme status because you are moving from one scheme to another (e.g. if you are moving from a trade scheme to the limited cost trader percentage of 16.5%, which came into effect on 1st April 2017) or because you are switching from the Flat Rate Scheme to the standard VAT scheme or vice versa.
If you want the change to your Flat Rate Scheme status to take effect from a VAT quarter start date, please follow the instructions outlined in our article on checking, editing and locking a VAT return.
If you want the change to take effect from a date that falls mid-way through a VAT quarter, you will need to complete the following steps to file your VAT return for that quarter.
Navigate to ‘VAT’ and select the relevant VAT return from the list. Select the ‘Edit Details’ button on the return and enter the day before the date you want the change to take effect as the period end date. If you want the change to take effect on 1st October 2020, for example, enter 30th September 2020. This will change the end date displayed on the VAT return to the new date that you typed in. The new date needs to be the last day of a calendar month.
FreeAgent will automatically generate another VAT return which will be dated from the day after the new period end date you entered earlier. In the example above, the second return would be dated from 1st October 2020. Select the ‘Edit Details’ button on that VAT return and enter the last day of your current VAT quarter (this would be either 31st October or 30th November 2020 in the example above) as the period end date. Again, the new date needs to be the last day of a calendar month.
Update your Flat Rate Scheme details in this section, either by choosing your new scheme from the drop-down menu or checking the ‘No’ checkbox if you’re moving away from the Flat Rate Scheme altogether. If you are moving on to the limited cost trader percentage of 16.5%, select 'Limited cost trader' from the 'Which scheme?' drop-down menu.
Now you need to file a single VAT return for the full VAT quarter by using HMRC’s online portal. If you’re filing through Making Tax Digital (MTD) you will need to use bridging software to do this. If you’re not filing through MTD then you should use HMRC’s online portal to file instead. For each of the boxes on the VAT return, enter the total amount that’s displayed in the corresponding boxes in the two returns in FreeAgent.
For example, to work out the figure that you need to enter in box 1 on HMRC’s online portal, look at the VAT return that ended on 30th September 2020 in FreeAgent and make a note of how much was in box 1 on that return. Then look at the VAT return that ended on 31st October or 30th November 2020 and make a note of how much was in box 1 on that return. Add both these box 1 figures together and enter the total amount in HMRC’s online portal or your bridging software. Repeat these steps for boxes 2-9.
Finally, mark both the VAT returns that cover the full quarter as filed in FreeAgent. To do this, select the ‘Unfiled’ button that appears at the top of each of the VAT returns and then select ‘Mark as filed’ from the drop-down menu.
After completing this process for the current quarter, you will be able to file your future VAT returns through FreeAgent as normal - but it’s a good idea to check the start and end dates of your next VAT return before you get started.